[House Report 117-65]
[From the U.S. Government Publishing Office]
117th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 117-65
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LGBTQ BUSINESS EQUAL CREDIT ENFORCEMENT AND INVESTMENT ACT
_______
June 17, 2021.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Ms. Waters, from the Committee on Financial Services, submitted the
following
R E P O R T
[To accompany H.R. 1443]
The Committee on Financial Services, to whom was referred
the bill (H.R. 1443) to amend the Equal Credit Opportunity Act
to require the collection of small business loan data related
to LGBTQ-owned businesses, having considered the same, reports
favorably thereon with an amendment and recommends that the
bill as amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 2
Section-by-Section Analysis of the Legislation................... 4
Hearings......................................................... 5
Committee Consideration.......................................... 5
Committee Votes.................................................. 5
Committee Oversight Findings..................................... 5
Statement of Performance Goals and Objectives.................... 6
New Budget Authority and CBO Cost Estimate....................... 6
Committee Cost Estimate.......................................... 6
Federal Mandates Statement....................................... 6
Advisory Committee Statement..................................... 6
Applicability to Legislative Branch.............................. 6
Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits....................................................... 6
Duplicative Federal Programs..................................... 7
Changes in Existing Law.......................................... 7
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``LGBTQ Business Equal Credit
Enforcement and Investment Act''.
SEC. 2. SMALL BUSINESS LOAN DATA COLLECTION.
(a) In General.--Section 704B of the Equal Credit Opportunity Act (15
U.S.C. 1691c-2) is amended--
(1) by inserting ``LGBTQ-owned,'' after ``minority-owned,''
each place such term appears;
(2) in subsection (e)(2)(G), by inserting ``, sexual
orientation, gender identity'' after ``sex''; and
(3) in subsection (h), by adding at the end the following:
``(7) LGBTQ-owned business.--The term `LGBTQ-owned business'
means a business--
``(A) more than 50 percent of the ownership or
control of which is held by 1 or more individuals self-
identifying as lesbian, gay, bisexual, transgender, or
queer; and
``(B) more than 50 percent of the net profit or loss
of which accrues to 1 or more individuals self-
identifying as lesbian, gay, bisexual, transgender, or
queer.''.
(b) Sense of Congress.--It is the sense of the Congress that the term
``sex'', as used within the Equal Credit Opportunity Act, includes an
individual's sexual orientation and gender identity, and that this Act,
in part, clarifies that the sex, sexual orientation, and gender
identity of the principal owners of a business should be collected
under section 704B of the Equal Credit Opportunity Act as three
separate forms of information.
Purpose and Summary
On February 26, 2021, Representative Ritchie Torres (D-NY-
15) introduced H.R. 1443, the LGBTQ Business Equal Credit
Enforcement and Investment Act, which would amend the Equal
Credit Opportunity Act (ECOA) to require financial institutions
to collect and report the self-identified sexual orientation
and gender identity of small businesses owners. The collection
of this information would be in addition to the sex, race, and
ethnicity of small business owners, which are already required
under ECOA. This bill also includes a definition for businesses
owned by lesbian, gay, bisexual, transgender or queer or
questioning (LGBTQ) individuals.
Background and Need for Legislation
On June 15, 2020, the Supreme Court ruled that the
prohibition against sex discrimination in Title VII of the
Civil Rights Act of 1964 (Title VII) encompasses sexual
orientation discrimination and gender identity
discrimination.\1\ In March 2021, the Consumer Financial
Protection Bureau (CFPB) issued an interpretative rule,
consistent with that Supreme Court decision, to clarify that,
with respect to any aspect of a credit transaction, the
prohibition against sex discrimination in ECOA\2\ and
Regulation B encompasses sexual orientation discrimination and
gender identity discrimination, including discrimination based
on actual or perceived nonconformity with sex- based or gender-
based stereotypes and discrimination based on an applicant's
associations.\3\
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\1\Bostock v. Clayton Cty., Georgia, 140 S. Ct. 1731, 207 L. Ed. 2d
218 (2020).
\2\15 U.S. Code Sec. 1691 (1974).
\3\Consumer Financial Protection Bureau, Equal Credit Opportunity
(Regulation B); Discrimination on the Bases of Sexual Orientation and
Gender Identity, 86 Fed. Reg. 14363 (March 16, 2021) (interpretive
rule).
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While there is a lack specific data on LGBTQ+ owned
businesses due in part to a lack of data collection
requirements, recent research demonstrates that LGBTQ+
individuals in the United States face significant barriers to
economic opportunity, including access to credit. For example,
in 2015, one national survey found that that transgender
respondents were three times more likely than the general
population to report annual household income below $10,000, and
had an unemployment rate that was three times higher than the
national rate.\4\ Moreover, in 2019, more LGBT people were
living in poverty than straight cisgender people, with LGBT
people of color experiencing higher poverty rates than same-
race cisgender straight people.\5\ For example, one study found
that nearly 31 percent of Black LGBT people live in poverty,
compared with nearly 25 percent of Black cisgender straight
people.\6\ Research also shows that LGBTQ individuals and
communities experience discrimination when applying for a
mortgage and other forms of credit because of their sexual
orientation or gender identity.\7\ For example, a study of Home
Mortgage Disclosure Act (HMDA) data from 2019 found that loans
in neighborhoods with a higher density of LGBTQ people received
higher interest and fees, regardless of the applicants'
sexuality.\8\
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\4\S. E. James, et al., The Report of the 2015 U.S. Transgender
Survey, National Center for Transgender Equality, (2016).
\5\M.V. Lee Badgett, et al., LGBT Poverty in the United States: A
study of differences between sexual orientation and gender identity
groups, UCLA School of Law, Williams Institute, (October 2019).
\6\Id.
\7\Hua Sun & Lei Gao, Lending practices to same-sex borrowers,
Proceedings of the National Academy of Sciences (May 17, 2019); S.
Goldberg et al., LGBT People And Housing Affordability, Discrimination,
and Homelessness, UCLA School of Law, Williams Institute (Apr. 2020);
National Community Reinvestment Coalition, Same-Sex Couples and
Mortgage Lending, (Jun. 22, 2020).
\8\See Hua Sun & Lei Gao, Lending practices to same-sex borrowers,
Proceedings of the National Academy of Sciences (May 17, 2019).
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An estimated 70 percent of LGBTQ individuals live in states
that do not prohibit credit discrimination based on sexual
orientation or gender identity.\9\ Under the current Federal
statute, ECOA-- which prohibits creditors from denying,
discouraging, or applying inconsistent standards to, consumers
seeking credit products or loans based on their sex--does not
explicitly protect individuals against discrimination based on
their sexual orientation or gender identity. However, plenty of
legal precedent supports the argument that the prohibition of
sex discrimination in ECOA and Regulation B includes protection
on the bases of gender identity and sexual orientation.\10\
H.R. 5, the Equality Act, which passed in the House of
Representatives on February 25, 2021, would make explicit that
discrimination based on sexual orientation and gender identity
in areas including credit, employment and housing would be
prohibited under the law.\11\
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\9\Movement Advancement Project, Equality Maps: State
Nondiscrimination Laws, (May 4, 2021).
\10\Letter from CFPB Director Richard Cordray to Services and
Advocacy for GLBT Elders (SAGE), (Aug. 30, 2016).
\11\H.R. 5, 117th Cong. (2021).
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Recent research show that there are an estimated 1.4
million LGBT-owned businesses in the U.S.\12\ The 2015 U.S.
Transgender Survey found that 15 percent of respondents
reported self-employment in their own business, profession,
trade, or farm.\13\ Many LGBT-owned businesses rely on
certification programs to overcome historical barriers in
access to capital and government procurement contracts.\14\
According one 2016 survey of LGBT-owned businesses with access
to at least one form of certification, more than 66 percent
identified as gay-owned, 29.1 percent as lesbian-owned, 2.3
percent as bisexual-owned, and two percent as transgender-
owned.\15\
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\12\National LGBT Chamber of Commerce, America's LGBT Economy,
(Oct. 2016)
\13\See S.E. James, et al., The Report of the 2015 U.S. Transgender
Survey, National Center for Transgender Equality, (2016).
\14\Justin Nelson, The Equality Act Is Missing One Big Thing, The
Advocate (Sept. 23, 2015).
\15\See National LGBT Chamber of Commerce, America's LGBT Economy,
(Oct. 2016).
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Section 1071 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank) amended ECOA to require
financial institutions to collect, maintain, and submit to the
CFPB data on applications for credit for women-owned, minority-
owned, and small businesses, with the intent of facilitating
the enforcement of fair lending laws, and enable communities,
government agencies, and lenders to identify the community
development needs as it relates to women-owned, minority-owned,
and small businesses.\16\ Section 1071 does not explicitly
require financial institutions to collect data on LGBTQ-owned
businesses, and does not include a definition for a LGBTQ-owned
business.
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\16\Public Law 111-203, 124 Stat. 1376 (2010).
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The intent of H.R. 1443 is to reaffirm that the term
``sex'', as used within ECOA, includes an individual's sexual
orientation and gender identity, and to clarify that the sex,
sexual orientation, and gender identity of the principal owners
of a business should be collected under section 704B of the
Equal Credit Opportunity Act as three separate forms of
information. Moreover, by creating a definition of LGBTQ-owned
businesses in federal law, this, along with the bill's data
collection requirements, should help promote investment and
fair lending to LGBTQ-owned businesses.
Relatedly, another purpose of this legislation is to
encourage the CFPB to promptly finalize the rulemaking required
by Section 1071 of Dodd-Frank, and in doing so, to be inclusive
of LGBTQ-owned businesses with respect to promoting
transparency and ensuring fair lending opportunities for these
businesses.
This bill is supported by Center for American Progress,
Center for LGBTQ Economic Advancement & Research, Equality
Federation, Family Equality, Freedom for All Americans, Human
Rights Campaign, National Center for Lesbian Rights, National
Center for Transgender Equality, National Gay and Lesbian
Chamber of Commerce, National Gay and Lesbian Chamber of
Commerce, National LGBTQ Task Force Action Fund, the National
Center for Transgender Equality, Out Leadership, PFLAG
National, and SAGE.
Section-by-Section Analysis
Section 1. Short title
This section states that the title of the bill is the LGBTQ
Business Equal Credit Enforcement and Investment Act.
Section 2. Small business loan data collection
This section would amend Section 704B of the Equal Credit
Opportunity Act (15 U.S.C. 1691c-2) to require financial
institutions to collect loan applicant data from LGBTQ-owned
businesses, and clarifies the self-identified sex, sexual
orientation, and gender identity of the principal owners of a
business should be collected as three separate forms of
information. This section would also add a definition of an
LGBTQ-owned business to the ECOA statute and include a Sense of
Congress confirming that sexual orientation and gender identity
are already covered under ECOA.
Hearings
For the purposes of section 3(c)(6) of House Rule XIII, the
following hearings considered issues that would be addressed by
H.R. 1443:
(1) On February 24, 2021 the Subcommittee on Oversight and
Investigations held a hearing entitled, ``How Invidious
Discrimination Works and Hurts: An Examination of Lending
Discrimination and Its Long-term Economic Impacts on Borrowers
of Color,'' which examined invidious discrimination in lending,
its modern manifestations, and its lasting effects on growing
wealth gaps. The witnesses at this subcommittee hearing were:
William Darity, Jr., Professor of Public Policy, African and
African American Studies, and Economics, Duke University,
Director; Samuel DuBois Cook Center on Social Equity; Lisa
Rice, President & CEO, National Fair Housing Alliance (NFHA);
Andre Perry, Senior Fellow, Metropolitan Policy Program, The
Brookings Institution; Frances Espinoza, Executive Director,
North Texas Fair Housing Center; and Cheryl Cooper, Analyst,
Financial Economics Division, Congressional Research Service.
(2) On March 10, 2021 the Full Committee held a hearing
entitled, ``Justice for All: Achieving Racial Equity Through
Fair Access to Housing and Financial Services,'' which examined
the barriers and biases erected against people of color and
individuals experiencing discrimination based on their gender
identity and sexual orientation, the businesses they own, and
the communities they live in that have been exacerbated by the
COVID-19 pandemic, including challenges in accessing capital
and banking services. The witnesses at this full committee
hearing were: Paulina Gonzalez-Brito, Executive Director,
California Reinvestment Coalition; Rashad Robinson, President,
Color of Change; Dr. Keeanga-Yamahtta Taylor, Assistant
Professor of African-American Studies, Princeton University;
John C. Yang, President and Executive Director, Asian Americans
Advancing Justice (AAJC); and Ian Rowe, President and Co-
Founder of Vertex Partnership Academies.
Committee Consideration
The Committee on Financial Services met in open session on
May 12, 2021, and ordered H.R. 1443 to be reported favorably to
the House with an amendment in the nature of a substitute by a
voice vote, a quorum being present.
Committee Votes and Roll Call Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that no
recorded votes were requested during consideration of H.R. 1443
and that H.R. 1443 was ordered to be reported favorably with an
Amendment in the Nature of a Substitute by a voice vote.
Statement of Oversight Findings and Recommendations of the Committee
In compliance with clause 3(c)(1) of rule XIII and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the Committee's oversight findings and recommendations are
reflected in the descriptive portions of this report.
Statement of Performance Goals and Objectives
Pursuant to clause (3)(c) of rule XIII of the Rules of the
House of Representatives, the goals of H.R. 1443 are to clarify
that financial institutions are required to collect and report
the self-identified sexual orientation and gender identity of
business loan applicants, and to ensure that LGBTQ-owned
businesses have equal access to credit opportunities.
New Budget Authority and CBO Cost Estimate
Pursuant to clause 3(c)(2) of rule XIII of the Rules of the
House of Representatives and section 308(a) of the
Congressional Budget Act of 1974, and pursuant to clause
3(c)(3) of rule XIII of the Rules of the House of
Representatives and section 402 of the Congressional Budget Act
of 1974, the Committee has requested an estimate from the
Director of the Congressional Budget Office. CBO was unable to
provide an estimate in a timely manner.
Committee Cost Estimate
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison of the
costs that would be incurred in carrying out H.R. 1443. After
careful review, including discussions with the Congressional
Budget Office, the Committee estimates that H.R. 1443 would
have an insignificant impact on spending.
Unfunded Mandate Statement
Pursuant to Section 423 of the Congressional Budget and
Impoundment Control Act (as amended by Section 101(a)(2) of the
Unfunded Mandates Reform Act, Pub. L. 104-4), the Committee
adopts as its own the estimate of federal mandates regarding
H.R. 1443, as amended, prepared by the Director of the
Congressional Budget Office.
Advisory Committee
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Application of Law to the Legislative Branch
Pursuant to section 102(b)(3) of the Congressional
Accountability Act, Pub. L. No. 104-1, H.R. 1443, as amended,
does not apply to terms and conditions of employment or to
access to public services or accommodations within the
legislative branch.
Earmark Statement
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 1443 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as described in clauses 9(e), 9(f), and 9(g) of rule
XXI.
Duplication of Federal Programs
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the
House of Representatives, the Committee states that no
provision of H.R. 1443 establishes or reauthorizes a program of
the Federal Government known to be duplicative of another
federal program, a program that was included in any report from
the Government Accountability Office to Congress pursuant to
section 21 of Public Law 111-139, or a program related to a
program identified in the most recent Catalog of Federal
Domestic Assistance.
Changes to Existing Law
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, H.R. 1443, as reported, are shown as follows:
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italics and existing law in which no change is
proposed is shown in roman):
EQUAL CREDIT OPPORTUNITY ACT
* * * * * * *
TITLE VII--EQUAL CREDIT OPPORTUNITY
* * * * * * *
SEC. 704B. SMALL BUSINESS LOAN DATA COLLECTION.
(a) Purpose.--The purpose of this section is to facilitate
enforcement of fair lending laws and enable communities,
governmental entities, and creditors to identify business and
community development needs and opportunities of women-owned,
minority-owned, LGBTQ-owned, and small businesses.
(b) Information Gathering.--Subject to the requirements of
this section, in the case of any application to a financial
institution for credit for women-owned, minority-owned, LGBTQ-
owned, or small business, the financial institution shall--
(1) inquire whether the business is a women-owned,
minority-owned, LGBTQ-owned, or small business, without
regard to whether such application is received in
person, by mail, by telephone, by electronic mail or
other form of electronic transmission, or by any other
means, and whether or not such application is in
response to a solicitation by the financial
institution; and
(2) maintain a record of the responses to such
inquiry, separate from the application and accompanying
information.
(c) Right To Refuse.--Any applicant for credit may refuse to
provide any information requested pursuant to subsection (b) in
connection with any application for credit.
(d) No Access by Underwriters.--
(1) Limitation.--Where feasible, no loan underwriter
or other officer or employee of a financial
institution, or any affiliate of a financial
institution, involved in making any determination
concerning an application for credit shall have access
to any information provided by the applicant pursuant
to a request under subsection (b) in connection with
such application.
(2) Limited access.--If a financial institution
determines that a loan underwriter or other officer or
employee of a financial institution, or any affiliate
of a financial institution, involved in making any
determination concerning an application for credit
should have access to any information provided by the
applicant pursuant to a request under subsection (b),
the financial institution shall provide notice to the
applicant of the access of the underwriter to such
information, along with notice that the financial
institution may not discriminate on the basis of such
information.
(e) Form and Manner of Information.--
(1) In general.--Each financial institution shall
compile and maintain, in accordance with regulations of
the Bureau, a record of the information provided by any
loan applicant pursuant to a request under subsection
(b).
(2) Itemization.--Information compiled and maintained
under paragraph (1) shall be itemized in order to
clearly and conspicuously disclose--
(A) the number of the application and the
date on which the application was received;
(B) the type and purpose of the loan or other
credit being applied for;
(C) the amount of the credit or credit limit
applied for, and the amount of the credit
transaction or the credit limit approved for
such applicant;
(D) the type of action taken with respect to
such application, and the date of such action;
(E) the census tract in which is located the
principal place of business of the women-owned,
minority-owned, LGBTQ-owned, or small business
loan applicant;
(F) the gross annual revenue of the business
in the last fiscal year of the women-owned,
minority-owned, LGBTQ-owned, or small business
loan applicant preceding the date of the
application;
(G) the race, sex, sexual orientation, gender
identity, and ethnicity of the principal owners
of the business; and
(H) any additional data that the Bureau
determines would aid in fulfilling the purposes
of this section.
(3) No personally identifiable information.--In
compiling and maintaining any record of information
under this section, a financial institution may not
include in such record the name, specific address
(other than the census tract required under paragraph
(1)(E)), telephone number, electronic mail address, or
any other personally identifiable information
concerning any individual who is, or is connected with,
the women-owned, minority-owned, LGBTQ-owned, or small
business loan applicant.
(4) Discretion to delete or modify publicly available
data.--The Bureau may, at its discretion, delete or
modify data collected under this section which is or
will be available to the public, if the Bureau
determines that the deletion or modification of the
data would advance a privacy interest.
(f) Availability of Information.--
(1) Submission to bureau.--The data required to be
compiled and maintained under this section by any
financial institution shall be submitted annually to
the Bureau.
(2) Availability of information.--Information
compiled and maintained under this section shall be--
(A) retained for not less than 3 years after
the date of preparation;
(B) made available to any member of the
public, upon request, in the form required
under regulations prescribed by the Bureau;
(C) annually made available to the public
generally by the Bureau, in such form and in
such manner as is determined by the Bureau, by
regulation.
(3) Compilation of aggregate data.--The Bureau may,
at its discretion--
(A) compile and aggregate data collected
under this section for its own use; and
(B) make public such compilations of
aggregate data.
(g) Bureau Action.--
(1) In general.--The Bureau shall prescribe such
rules and issue such guidance as may be necessary to
carry out, enforce, and compile data pursuant to this
section.
(2) Exceptions.--The Bureau, by rule or order, may
adopt exceptions to any requirement of this section and
may, conditionally or unconditionally, exempt any
financial institution or class of financial
institutions from the requirements of this section, as
the Bureau deems necessary or appropriate to carry out
the purposes of this section.
(3) Guidance.--The Bureau shall issue guidance
designed to facilitate compliance with the requirements
of this section, including assisting financial
institutions in working with applicants to determine
whether the applicants are women-owned, minority-owned,
LGBTQ-owned, or small businesses for purposes of this
section.
(h) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Financial institution.--The term ``financial
institution'' means any partnership, company,
corporation, association (incorporated or
unincorporated), trust, estate, cooperative
organization, or other entity that engages in any
financial activity.
(2) Small business.--The term ``small business'' has
the same meaning as the term ``small business concern''
in section 3 of the Small Business Act (15 U.S.C. 632).
(3) Small business loan.--The term ``small business
loan'' means a loan made to a small business.
(4) Minority.--The term ``minority'' has the same
meaning as in section 1204(c)(3) of the Financial
Institutions Reform, Recovery, and Enforcement Act of
1989.
(5) Minority-owned business.--The term ``minority-
owned business'' means a business--
(A) more than 50 percent of the ownership or
control of which is held by 1 or more minority
individuals; and
(B) more than 50 percent of the net profit or
loss of which accrues to 1 or more minority
individuals.
(6) Women-owned business.--The term ``women-owned
business'' means a business--
(A) more than 50 percent of the ownership or
control of which is held by 1 or more women;
and
(B) more than 50 percent of the net profit or
loss of which accrues to 1 or more women.
(7) Lgbtq-owned business.--The term ``LGBTQ-owned
business'' means a business--
(A) more than 50 percent of the ownership or
control of which is held by 1 or more
individuals self-identifying as lesbian, gay,
bisexual, transgender, or queer; and
(B) more than 50 percent of the net profit or
loss of which accrues to 1 or more individuals
self-identifying as lesbian, gay, bisexual,
transgender, or queer.
* * * * * * *
[all]